With costs for capital construction continuing to spike, Longmont City Council will be discussing the resulting budget shortfalls for planned projects at Tuesday’s study session.
Construction projects scoped 18-24 months ago are receiving low bids that are as much as 50% more expensive than expected, a shift that exceeds contingencies within project budgets, according to a memo to the council. This is impacting six major city projects that will be reviewed Tuesday.
Staff said while sharp increases in consumer costs since 2020 have leveled somewhat, construction costs remain high. Increased labor costs have persisted, as have impacts from supply chain disruptions.
“Additionally, the global prices for oil and other commodities that are essential components of construction materials remain elevated,” the staff report said. “Finally, US interest rates, while now rising more slowly, are significantly higher than they have been in recent years”
In addition to global and national context, regional impacts on construction demand — like the Marshall fire and grant-funded infrastructure projects — means construction companies are more selective about the projects they undertake.
Projects to be reviewed include the Safety and Justice building remodel, Coffman Street busway improvements, Boston Avenue bridge, First and Main Transit Station, railroad quiet zones, Nelson-Flanders Water Treatment Plant expansion and Montgomery Tank replacement.
On top of those projects, annual capital maintenance on various electric, water, wastewater, storm drainage and transportation services may have to be delayed due to increased costs — but this could lead to impacts on system conditions or possible service interruptions.
While solutions to the projected budget shortfalls will not be finalized at Tuesday’s meeting, potential solutions may be to change the scope of projects, adjusting the scheduling for completion or increasing the funds allocated.
